How Nigeria swept the cryptocurrency fever

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Cryptocurrency and blockchain have become familiar phenomena in the African country. And here’s why.

In recent years more and more ordinary citizens and entrepreneurs of Nigeria begin to consider bitcoin (Bitcoin) as an alternative national currency, Naira, which suffers from high volatility. However, it is curious that the interest of Nigerians to the cryptocurrency began not with universal hype, and Scam.

A pyramid scheme

In the period from late 2015 to late 2016 the famous Russian fraudster Sergei Mavrodi deceived millions of Nigerians, promising a 30 percent income in just 30 days. It was necessary to invest in Mavrodi Mondial Moneybox (MMM) division of the financial pyramid, which was founded in Russia in 1989.

From February to July, 2016, the number of participants of the pyramid jumped from a few thousand to two million. Nigerians have joined the program, despite repeated warnings by the Central Bank and the Commission of economic and financial crimes (the latter then began to investigate the activities of the pyramid). Citizens ‘ desire to join the MMM was not unexpected — the country experienced a severe economic crisis over the last 25 years.

When the authorities began to block the accounts associated with the pyramid, the operators refused the services of the banks and moved on to bitcoin, convincing the local population that for him the future.

The pyramid collapsed just before Christmas 2016, raising over $ 50 million (the average annual income in the country does not exceed 3 thousand dollars). In total suffered about 3 million Nigerians. However, MMM has introduced residents to the world of cryptocurrency. It’s safe to say that they were defeated pretty mixed feelings when a 25 March 2018 at the age of 63 years Mavrodi died of a heart attack in a Moscow hospital.

However, with the termination of the MMM scammers in the country were not satisfied. Dubious businessmen flooded the cryptocurrency exchanges, messengers and even the streets of Lagos and other cities, promising quick money and disappear as soon as I had questions.

Nigeria as kriptotsentr

Over the last few years, Nigeria has become a major cryptocurrency center. One of the latest achievements was the launch of the country’s Quidax platform for the exchange of digital assets, developed by the eponymous European company.

Quidax allows you to buy and sell six cryptocurrency — bitcoin, ether, XRP, litecoin, Bitcoin Gold, Bitcoin and Cash. In the next three months, their number should increase to 20.

In turn, national center for innovation KAD ICT in cooperation with the British company Coinfirm launched the project Africa Blockchain Lab. Its purpose is to improve financial integration of the African blockchain-companies.

As of December 2017 Nigeria ranked second in the world after China in terms of local trading bitcoins. During the year the number of peer-to-peer transactions increased almost 15 times, while the trading volume exceeded 115 million dollars. This happened on the background of the reform of the financial system, which resulted in the national currency fell by 12.4%.

The actions of the authorities

The Central Bank of Nigeria has repeatedly warned citizens about the dangers of investing in cryptocurrencies. In January of this year, the managing controller Godwyn Empire stated that “investing in cryptocurrencies is speculation,” and hinted at the possibility to ban them. In an interview with Bloomberg, he said:

“The Central Bank can do nothing in a situation when people are ready to risk their savings.”

In January 2017 TSBN has issued a circular to creditors with the request to avoid the use, storage or trading of virtual currency without a “special decision of the Central Bank or imposition of regulatory standards.”

28 February published a Supplement to the circular. In it the Bank said that cryptocurrencies and exchanges are not licensed or regulated by TSBN. The Bank recalled that in Nigeria, dealers and investors in cryptocurrency are not protected by the law and emphasized the high risks associated with digital assets:

“Virtual currency traded on an unregulated exchange platforms worldwide. As a result, consumers can lose all your money without the possibility of reimbursement or the legal prosecution in case of the exchange cease to exist or stop activities”.

A month later, Adik Hoche, head of the research Department at the Nigerian Corporation of insurance of deposits (NCSD), stressed that “cryptocurrencies are not deposits or financial instruments permitted by the Central Bank of Nigeria. So they are not immune NCSD”.

“These forms of currency not backed by any physical assets like gold and precious stones. They did not relate to currencies issued by TSBN or Central banks of other countries,” said Hoche.

He also warned that holders of cryptocurrencies are solely responsible for any damages associated with them.

26 April 2018, the members of the house of representatives called for TSBN and NCSD to create a legal framework to regulate the technology of the blockchain.

The blockchain as a way of fighting corruption

Don’t forget in Nigeria and the blockchain. With his help the African country intends to fight corruption. The customs service of Nigeria (TSN) develops Oracle’Blockchain app’s Cloud Service. It will allow to manage business processes and will ultimately lead to the formation of corruption-free environment. The platform will be used to document and track products produced in the country, and for keeping track of licenses and permits.

According to Abera, Benjamin, assistant Comptroller General, automation of trade excise duty on the basis of the blockchain will increase the revenue of the customs service by 50%. Currently, TSN collects about $ 280 million per month.

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